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How Blockchain is good news for climate change

Blockchain technology has emerged as a disruptive force capable of directly addressing the world’s most pressing environmental challenges, providing a glimmer of hope for a sustainable future.

As the world’s attention shifts towards combating climate change and promoting sustainability, blockchain and cryptocurrencies are emerging as major players driving this shift. The technology’s potential to reduce energy consumption, lower carbon emissions, and enable more efficient financial transactions through mass adoption remains to be explored.

While some cryptocurrencies, such as Bitcoin, are still grappling with carbon-intensive legacy issues, the blockchain and crypto industry are challenging the status quo by promoting a remote-first culture, proof-of-stake consensus, and less carbon-intensive operations.

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“Blockchain innovation promises to revolutionize energy consumption and reduce carbon footprint”

With climate change still one of the most significant challenges we face today, the blockchain industry has taken bold steps to address energy consumption and reduce its carbon footprint.

The green future of cross-border payments

The financial landscape is changing dramatically as blockchain technology is disrupting traditional finance on various fronts, including sustainability. Blockchain technology and digital currencies are going mainstream, with more transactions occurring on-chain and central banks speeding up issuance of their digital currencies.

Ripple and SBI Remit have teamed up on a system that helps nearly 50,000 Thai citizens in Japan send money home. Leveraging blockchain technology, Ripple and SBI Remit have created a more efficient and environmentally friendly solution for cross-border payments.

Blockchain-based payment platforms provide fast and cost-effective international payments. This reduces the need for physical transportation of money and paper documents. By streamlining these processes, blockchain technology contributes to a more sustainable financial system by helping to reduce energy emissions.

In 2022, USDT handled approximately $18.2 trillion in transactions. However, MasterCard processed fewer transactions worth $14.1 trillion than in the previous year. Meanwhile, Visa reported a $7.7 trillion deal, which puts it in third place.

Blockchain technology also has a lower carbon footprint than paper transactions. Legacy systems that employ thousands of people, large offices, and tons of paper have a much higher carbon footprint.

Addressing the power consumption issue of cryptography using Proof of Stake

The proof-of-stake (PoS) consensus mechanism for cryptocurrency is a promising solution to address the problem of excessive power consumption in the industry. Now the industry is becoming more aware of its environmental impact. As Bitcoin’s use of energy grows, Ethereum is moving to a more environmentally sustainable approach.

Ethereum successfully implemented a PoS consensus mechanism with its Ethereum 2.0 upgrade in 2022, known as a “consolidation.” This move is expected to reduce Ethereum’s carbon footprint by an impressive 99.95% and make the blockchain more secure with a smaller carbon footprint.

Compared to the traditional Proof-of-Work (PoW) mechanism, PoS consumes significantly less energy, making Ethereum a more environmentally friendly option. Ethereum is not the only innovator in the space, as almost all of the leading players are racing for more sustainable transactions with the minimum required power consumption.

Blockchain industry is embracing renewable energy

The blockchain industry is actively exploring the use of renewable energy sources to support the energy-intensive process of mining cryptocurrency.

Soluna, a leading blockchain company, is building a 900MW wind-powered cryptocurrency mining farm in Morocco, showcasing the potential of renewable energy to revolutionize the way cryptocurrency is mined.

After becoming the first country to recognize bitcoin as legal tender, El Salvador’s President Neb Bukele has directed the state-owned geothermal electricity company to investigate the use of geothermal energy from the country’s volcanoes to mine cryptocurrency.

Innovative approaches, such as using excess energy from industrial mining operations, are also gaining in popularity. This method helps reduce waste and mitigate the environmental impact of mining, which is known for its high energy consumption.

Companies like Northern Bitcoin are finding cleaner and more cost-effective ways to mine cryptocurrency. For example, Northern Bitcoin set up a data center in a former Norwegian metal mine. Hydroelectric and wind power are used to power the computers and cold water from the nearby fjord to cool the machines.

Since energy storage has always been a challenge for countries seeking to balance production and consumption, shifting excess energy towards mining could be a potential solution to increase adoption and store of value.

Revolutionizing supply chain management for sustainable development

The crypto industry is disrupting traditional financial institutions by revolutionizing how value is exchanged. And blockchain technology is being embraced by traditional companies to reinvent their approach.

In the food industry, IBM and Walmart have collaborated to develop the IBM Food Trust. This blockchain-based system allows users to track food products from one farm to another. In this way transparency and accountability in the supply chain is ensured.

Similarly, blockchain technology is being used in the diamond industry by companies such as De Beers and Alrosa. They have developed blockchain-based systems to track the journey of diamonds, ensuring ethical and conflict-free sourcing.

Even the fashion industry is exploring blockchain

Meanwhile, in the fashion industry, companies like H&M, Levi Strauss & Co. Blockchain technology to promote sustainability. They use blockchain-based systems to track the origin of raw materials and ensure ethical sourcing and production.

Without a doubt, blockchain technology can drive the sustainability journey of humanity in different ways. These include resource sharing, value exchange, and regulation of carbon trading.

BE (IN) CRYPTO Global Crypto and Web3 Sustainability Report

sustainable growth and reducing climate impact

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The potential of Web 3 tools and blockchain technologies extends far beyond the often volatile and speculative world of the cryptocurrency market. To successfully navigate this changing tide, it is essential to develop a comprehensive understanding of the transformative potential of technology and its implications for the broader business landscape.

In pursuit of a greener future, businesses, corporations, and nations alike must develop solutions aligned with a common goal. Blockchain technology and cryptocurrency have emerged as indispensable allies in this endeavor. They can foster collaboration between businesses, governments and individuals to create lasting positive change in the world.

By addressing energy consumption concerns, facilitating the adoption of renewable energy, revolutionizing carbon offset markets, and driving change in the financial industry, these digital innovations contribute significantly to the global effort to mitigate climate change and protect our environment.

Disclaimer

In accordance with Trust Project guidelines, this opinion article presents the author’s view and may not necessarily reflect the views of BeInCrypto. BeInCrypto remains committed to transparent reporting and upholding the highest standards of journalism. Readers are advised to independently verify information and consult with a professional before making decisions based on this content.

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